Time is money, but how much money?

I've spent a lot of time recently working on transport economics. I am neither an economist nor a transport planner so it's been a steep learning curve. Most of the stuff I've seen makes sense, but some is worryingly poor. Maybe I just haven't understood it yet.

Today I'm sharing a very cool result I found recently. I was testing a core principle in transport economics, that time is money. It's used to calculate the potential benefits of almost every investment we make in tranasport and it crucially assumes that the relationship is linear. Saving 10 minutes is worth double what saving 5 minutes is worth. And saving 20 minutes is worth twice again.

The assumption seems reasonable. But is it true?

Time is money, but how much money?

Birmingham and London are fantastically well-connected cities. There are two motorways, along which two rival bus companies run regularly. There are two mainline railways, along which three rival train companies run regularly. Thousands of people travel from Birmingham to London each morning and the services can mostly set their own pricing. It's a free-marketer's dream!

So I looked three days in advance at how much a ticket would cost to arrive in London at 08:30am. Here's a graph,

Remember, these are five independent companies, running five independent services with unregulated prices. The market decides how much to charge and the results suggest that almost all of the difference in price can be explained by the speed of the journey.

But the relationship between time and money is not linear.

This might change a lot about how we do transport economics. Or it might change nothing. I still need to do a lot of thinking about it. But I think it's cool either way.

Thanks for reading. I always welcome comments below. I almost always respond, but I can't promise to. Oh and in case you're wondering, the orange circle on my graph is how long HS2 will take. I think a ticket will be worth around £105. Let's see.